GAO Report Shows the Need for NFIP Reform

WASHINGTON (June 14, 2011) A report by the Government Accountability Office outlining the significant organizational flaws in the National Flood Insurance Program (NFIP) should spur Congress to act on reform legislation, the National Association of Mutual Insurance Companies (NAMIC) said today.

“This report makes clear something we at NAMIC have been saying for years; that the National Flood Insurance Program is in dire need of reform and will continue to be a threat to the taxpayers until Congress acts,” said Jimi Grande, senior vice president of federal affairs for NAMIC.

The report strongly criticizes the Federal Emergency Management Agency (FEMA) which has oversight over the NFIP for failing to develop goals, objectives or performance measures for the NFIP, and said the program is lacking in planning, collaboration among offices and records financial and acquisition management. GAO also outlined specific steps for the agency and for Congress, calling for greater use of risk-based premiums, authorizing the program to account for long-term flood erosion on floodplain maps and increasing FEMA’s ability to charge more or deny coverage for repetitive loss properties.

“The GAO’s recommendations mirror those made repeatedly by most stakeholders over the past few years, only to see the debate sidetracked by the wind/water issue and other political agendas that ran contrary to good public policy,” Grande said. “With another voice added to the chorus of reform, it’s time for Congress to start listening.”

Legislation implementing many of these reforms, HR 1309, was introduced earlier this year by Rep. Judy Biggert, R-Ill., who chairs the House Financial Services Subcommittee on Insurance, Housing and Community opportunity. It was passed unanimously by the full financial services committee and is awaiting a vote on the House floor.

“It’s been nearly six years since Hurricane Katrina devastated the Gulf Coast and overwhelmed the NFIP, and we continue to see flooding at historic levels across the country” Grande said. “In the meantime, the NFIP has been allowed to lapse several times, creating uncertainty and disrupting the housing market. With the next deadline just months away, we need Congress to fix this program.”